predatory lending & political contributions
Posted by Brent Finnegan on November 16th, 2006
Some of the ugliest buildings in Harrisonburg are payday loan businesses. The yellow pages show that there are at least nine payday loan companies in the burg. You’d think ugly buildings are reason enough to stop payday loans from popping up all over the place. But Vivian Paige has an even better reason: predatory lending.
Today the Virginia blogosphere is abuzz with news of House Bill 619, which VaPERL is trying to get onto the House floor. 619 would repeal the Payday Loan Act, which took the 36% APR cap off of payday loans (i.e. companies can now charge whatever they want for interest — up to 780% — because of that act. 619 would essentially re-rap loans in the state). A House committee will be voting in a few weeks to decide whether 619 should go to a vote in the House.
But, regardless of what you think of payday loans or the “free market” economy, my question is: why was the Payday Loan Act passed in the first place? It benefits no one but the loan companies — most of which are not based in Virginia. Myron mentioned that LoanMax contributed $2000 to Lohr this year (LoanMax has that hideous yellow building on the corner of South Main & Mosby). How many other Virginia politicians have gotten money from payday lenders? I’m guessing lots, but some of those contributions may have come from private individuals who own/operate payday loan companies. It’s hard to tell how deep it goes.
-finnegan
Tags: payday loans
If more people understood their options when comes to financing and debt consolidation these places wouldn’t be in business. A majority of their business comes from them being able to preasure the less informed into making a descision because they either need of feel that they need money immediatly. I’d like to see some the debt consolidation services become more agresive at getting people informed.
By law, they have to display this info (interest rates, how much at will cost, and that this is only for short-term needs) framed and in plain sight. I think these borrowers know, but are just too short-sighted to realize what they’re doing to their finances in the long run. The stats show that most borrowers get several of these loans a year.
Like so many other things (infidelity, drugs, etc) people make bad decisions that end up hurting themselves and their families. But to me, the big difference between this and other bad decisions is the lobby money behind keeping the interest rates up. Politicians are essentially being paid off to keep the interest caps off.